Published: 2019-02-13 21:06:11 CET
Íslandsbanki hf.
Annual Financial Report

Annual Results 2018

Íslandsbanki’s financial highlights 2018

  • The Bank’s after-tax profit was ISK 10.6bn (2017: ISK 13.2bn), and the annualised return on equity was 6.1% (2017: 7.5%).
  • Earnings from regular operations totalled ISK 12bn (2017: ISK 13.8bn), and the annualised return on equity from regular operations normalised for a 16% CET1 ratio was 8.0% (2017: 9.9%).
  • Net interest income totalled ISK 31.9bn (2017: ISK 30bn), an increase of 6.5% year-on-year. The net interest margin was unchanged between years at 2.9%.
  • The Bank’s consolidated net fee and commission income was ISK 12.2bn (2017: ISK 13.8bn), a decline of 11% YoY, whereas the parent company and Íslandssjóðir’s net fee and commission income rose by 6% YoY.
  • Net loan impairment generated a gain of ISK 1.6bn during the period, broadly the same as in the previous year.
  • Administrative expenses rose marginally between years, to ISK 27.7bn (2017: ISK 27bn).
  • The consolidated cost-to-income ratio was 66.3% at the end of 2018, as opposed to 62.5% in 2017, and the parent company cost-to-income ratio was 60.4%. The Bank’s long-term target is 55%.
  • Loans to customers increased by 12% (ISK 91.4bn) during the year, to an end-2018 total of ISK 846.6bn. New lending during the year totalled ISK 239bn.
  • Customer deposits grew by 2.1%, or ISK 11.9bn, during the year, to an end-2018 total of ISK 579bn.
  • The Bank’s liquidity is strong in both local and foreign currencies and is above regulatory requirements and internal limits. At the year-end, the liquidity coverage ratio (LCR) for the Group was 172% (2017: 142%) and the net stable funding ratio (NSFR) 114% (2017: 117%).
  • The Bank’s end-2018 leverage ratio was 14.6%, as opposed to 16.2% in 2017, which is considered modest in both domestic and foreign context.
  • The Board of Directors proposes that a dividend of ISK 5.3bn on 2018 profits be paid to the Bank´s shareholders. The dividend equals about 50% of the profit for the year and is therefore in line with the Bank’s long-term policy of paying dividends in the 40-50% range.
  • The Bank´s Annual Report and Pillar 3 Report are published at the same time as the Consolidated Financial Statements for 2018. They can be accessed here: 

Fourth quarter (Q4/18) financial highlights

  • The Bank’s after-tax profit totalled ISK 1.4bn (Q4/2017: ISK 3.1bn). The annualised return on equity was 3.2% (Q4/2017: 6.9%).
  • Earnings from regular operations totalled ISK 2.1bn (2017: ISK 3.6bn), and the annualised return on equity from regular operations normalised for a 16% CET1 ratio was 5.3% (Q4/2017: 10.3%).
  • Net interest income amounted to ISK 8.3bn (2017: ISK 7.3bn), and the net interest margin was 3% (Q4/2017: 2.8%).
  • Net fee and commission income was ISK 3.5bn (Q4/2017: ISK 3.6bn).

Birna Einarsdóttir, Íslandsbanki Chief Executive Officer:

Íslandsbanki prioritised digital advancements in 2018. We launched a new core system, the largest tech project undertaken by the Bank since its establishment, and we rolled out a large number of new digital solutions for our customers.

We are delighted to rank #1 for banking services in Iceland among customers, and for the sixth year in a row we topped the Icelandic Customer Satisfaction Index. We will continue to offer reliable and outstanding services and to enable our customers to do their banking whenever they want, wherever they are.

The Bank’s loan book grew by 12% during the year, including a strong increase in corporate lending, and surveys have shown that Íslandsbanki is in the lead in terms of corporate customers’ satisfaction. We have carved out a position as a leader in syndicated lending, our Corporate Finance and FX brokerage teams had an excellent year, and our subsidiary, Íslandssjóðir, launched Iceland’s first green bond fund during the year.

The Bank and Íslandssjóðir turned in a good operating performance during the year, with a consolidated profit of ISK 10.6bn, while operational difficulties among other subsidiaries cut into the year’s earnings. The Bank’s funding activities were successful during the year, its liquidity position is strong in both domestic and foreign currencies, and its risk is moderate and well managed.

In the past year, we have focused on modernising the Bank and building up a responsible business and risk culture. We intend to continue on that path in the coming year by formulating strategies that we are certain will make our Bank even better, for the benefit of the entire community.

We welcome the publication of the new White Paper on a Future Vision for the Financial System, issued at the end of the year, which confirms how much the Icelandic banking system has reformed in recent years. The White Paper also points out how heavy a tax burden the Icelandic banking system bears. This situation is mainly harmful to Icelandic consumers, and we hope to see it change.

Fourth quarter (Q4/18) operational highlights

  • Íslandsbanki announced its participation in the Nordic CEOs for a Sustainable Future initiative, in support of the UN Sustainable Development Goals 
  • Cooperation with the world’s largest fintech centre, Lattice 80 was announced by the Bank
  • The Bank made an ISK 410m investment in Meniga
  • Íslandsbanki and international fund management company Vanguard celebrated 20-year collaboration
  • A new fund, IS Green Bonds was launched by Íslandssjóðir
  • Íslandsbanki held a meeting on the status of women in the Icelandic labour market: “Where do women want to work?”

Investor relations

Investor call in English at 9.30 am (GMT).
On 14 February 2019 at 9.30 am (GMT), the Bank will hold an investor call. The call will begin with a short update on the Icelandic economy, followed by a review of the Bank’s financial results. The call will be in English.
Please register by sending an e-mail to: Dial-in details and presentations will be sent out to registered participants prior to the call.

Market participants meeting in Icelandic at 10.30 am (GMT).
A meeting with market participants in Icelandic will take place on 14 February 2019 at 10.30 am (GMT). The presentation will take place at the Íslandsbanki headquarters, Hagasmári 3, 9th floor, 201 Kópavogur. The presentation will be in Icelandic.
Please register by sending an e-mail to:

All materials relating to the Bank’s operating results, together with information on the financial calendar and silent periods, can be found here:

For further information:

Head of Investor Relations – Gunnar Magnusson,,  tel. +354 440 4665

Head of Communications - Edda Hermannsdottir, tel. +354 440 4005.



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About Íslandsbanki
A leader in financial services in Iceland, Íslandsbanki is a universal bank with total assets of ISK 1,130bn and a 25% - 50% market share across all domestic business segments. Building on over 140 years of servicing key industries, Íslandsbanki has developed specific expertise in tourism, seafood and energy related industries. Driven by the vision to be #1 for service, Íslandsbanki’s relationship banking business model is propelled by three business divisions that manage and build relationships with the Bank’ s customers. Íslandsbanki has developed a wide range of online services such as the Íslandsbanki and Kass apps, enabling customers to do their banking whenever and wherever. At the same time, the Bank continues to operate the most efficient branch network in Iceland through its strategically located 14 branches. For the sixth consecutive year, Íslandsbanki led the Icelandic Customer Satisfactory Index for banks in 2018 and was also named Best Bank of Iceland in 2018 by Euromoney. Íslandsbanki has a BBB+/A-2 rating from S&P Global Ratings.
This press release may contain “forward-looking statements,” involving uncertainty and risks that could cause actual results to differ materially from results expressed or implied by the statements. Íslandsbanki hf. undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. It is the investor's responsibility to not place undue reliance on these forward-looking statements which only reflect the date of this press release. Forward-looking statements should not be considered as guarantees or predictions of future events and all forward-looking statements are qualified in their entirety by this cautionary statement.